taat global alternatives inc
TRANSCRIPT
TAAT Global Alternatives Inc.Investor Presentation – Q2 2021
CSE: TAAT • OTCQB: TOBAF • FRANKFURT: 2TP2
Disclaimer – Forward Looking Statements
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This Presentation contains forward-looking statements that relate to theCompany’s current expectations and views of future events and shouldbe read together with the more detailed information and financial dataand statements available on the Company’s SEDAR profile atSEDAR.com. This Presentation does not contain all of the informationyou should consider before purchasing securities of the Company. It isnot intended to be relied upon as advice to investors or potentialinvestors and does not take into account the investment objectives,financial situation or needs of any particular investor. In some cases,these forward-looking statements can be identified by words or phrasessuch as “may”, “might”, “will”, “expect”, “anticipate”, “estimate”, “intend”,“plan”, “indicate”, “seek”, “believe”, “predict” or “likely”, or the negative ofthese terms, or other similar expressions intended to identify forward-looking statements. The Company has based these forward-lookingstatements on its current expectations and projections about futureevents and financial trends that it believes might affect its financialcondition, results of operations, business strategy and financial needs.These forward-looking statements include, among other things,statements relating to: the Company’s expectations regarding itsrevenue, expenses and operations; the Company’s intention and abilityto grow the business and its operations, including its ability to completeresearch and development activities; future product roll outs in newmarkets; expectations regarding production and sales; expectations withrespect to future production costs and capacity; expectations regardingour growth rates and growth plans and strategies; the Company’sexpected business objectives for the next twelve months; and theCompany’s expectations with respect to international developments and
initiatives. Forward-looking statements are based on certainassumptions and analyses made by the Company in light of theexperience and perception of historical trends, current conditions andexpected future developments and other factors it believes areappropriate and are subject to risks and uncertainties. In making theforward looking statements included in this Presentation, the Companyhas made various material assumptions, including but not limited to (i)obtaining or complying with the necessary regulatory approvals; (ii) thatregulatory requirements will be maintained; (iii) general business andeconomic conditions, including the ongoing impact of COVID19; (iv) theCompany’s ability to successfully execute its plans and intentions,including with respect to the ramp up of commercial operations and theachievement of expected revenues; (v) the availability of financing onreasonable terms; (vi) the Company’s ability to attract and retain skilledstaff; (vii) market competition; (viii) the products and technology offeredby the Company’s competitors; and (ix) that the Company’s currentgood relationships with its suppliers, service providers and other thirdparties will be maintained. Although we believe that the assumptionsunderlying these statements are reasonable, they may prove to beincorrect, and we cannot assure that actual results will be consistentwith these forward-looking statements. Given these risks, uncertaintiesand assumptions, prospective purchasers of the Company’s securitiesshould not place undue reliance on these forward-looking statements.Whether actual results, performance or achievements will conform tothe Company’s expectations and predictions is subject to a number ofknown and unknown risks, uncertainties, assumptions and other factors,including those listed under “Risk Factors” in the Company’s Listing
Statement filed under the Company’s SEDAR profile at SEDAR.com.The Company’s forward-looking statements are based on thereasonable beliefs, expectations and opinions of management. Althoughthe Company has attempted to identify important factors that couldcause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not tobe as anticipated, estimated or intended. There is no assurance thatsuch statements will prove to be accurate, as actual results and futureevents could differ materially from those anticipated in such statements.Accordingly, readers should not place undue reliance on forward-looking statements. We do not undertake to update or revise anyforward-looking statements, except as, and to the extent required by,applicable securities laws in Canada.
Disclaimer to United States Investors
The securities of the Company have not been registered under theUnited States Securities Act of 1933, as amended(the"U.S.SecuritiesAct"), or any state securities laws and may not beoffered or sold within the United States or to U.S. Persons unlessregistered under the U.S. Securities Act and applicable state securitieslaws or an exemption from such registration is available.
TAAT At A Glance
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INNOVATIVE / PATENTED PRODUCT Beyond Tobacco™ base material
engineered to closely mimic the tobacco smoking experience
FAVOURABLE CONSUMER DYNAMICS Massive addressable worldwide tobacco
market approaching US$1 trillion per year
ETHICAL MARKETING Nicotine-free products capitalizing on
cost-effective digital strategies
SCALABLE PRODUCTION PLATFORM Currently expanding to approximately 25,000
square foot facility in Las Vegas
MANAGED ROLLOUT Launched in Ohio in mid-December 2020 in
first phase of rollout
STRONG MANAGEMENT TEAM Substantial experience in cigarette industry
and capital markets
$1T
WIN-WIN ECONOMICS TAAT provides distributors and retailers
with superior returns vs. tobacco-based cigarettes
Beyond Tobacco™ Experience
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Engineered to closely replicate each and every sensory element of smoking a tobacco cigarette
Nearly identical product and packagingformat, enhanced smoke volume
Audible “crackling” sound of base materialwhen ignited to mimic tobacco
While burning, TAAT Beyond Tobacco™emits a pleasing scent
Patent-pending base material refinementprocess imparts realistic tobacco taste
Satisfies “hand-to-mouth” experience and“motor habits” such as flicking ashes
Base hemp material goes through a 14-step proprietary process to
taste and smell like tobacco, including a
patent-pending refinement technique
Innovative Patent
Pending Process
Innovative hemp-based alternative to tobacco cigarettes
Lower price point than tobacco cigarettes ~40% cheaper than a pack of the leading cigarette brand in Ohio, TAAT’s first market
Addresses high cost of smoking and consumers’ desire for a more affordable alternative
TAAT products contain no nicotine, a highly addictive substance
Portfolio of trademarks in more than 50 countries
2018 Farm Bill legalized hemp at the federal level in United States
Leveraging the marketing success of Beyond Meat at the consumer level
Three classic tobacco cigarette flavours: Original, Smooth and Menthol
Beyond Tobacco™ Experience
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TAAT’s unique, high-quality cigarettes represent a disruptive, attractive alternative to tobacco cigarettes and other smoking products
Enjoyed by Smokers
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The vast majority of smokers that sampled TAAT cigarettes in a product testing study enjoyed them
5% 9%6% 4%
3%
21% 17%
13%
34% 37%
37%
34% 33%47%
4%5%
17%
36%
38%Very good
Neither good nor poor
Somewhat good
Somewhat poorVery poor
Overall(n=176)
74%
Those whosmoke & useVapes / e-cigs
68% 70%84%
Original(n=62)
Smooth(n=54)
Menthol(n=60)
* Results from Usage & Attitude and Product Testing Research report completed by Burak Jacobson Research Partners Inc.
Strong Purchasing Intentions
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Most smokers that tried TAAT cigarettes in the product testing study indicated they were keen to purchase them
14% 20%10%
11%13%
12%
18%15%
15%
24%30%
25%
32%22%
38%
15%
12%
16%
26%
31%Definitely would
Might or might not
Probably would
Probably would not
Definitely would not
Overall(n=176)
57%
56% 52% 63%
Original(n=62)
Smooth(n=54)
Menthol(n=60)
* Results from Usage & Attitude and Product Testing Research report completed by Burak Jacobson Research Partners Inc.
TAAT’s Cigarettes Target Current Smokers
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MASSIVE ADDRESSABLE GLOBAL CIGARETTE MARKET
USD$925 Billion Tobacco Market - Worldwide U.S. $75 Billion Market Holds only 3% of Smokers
One pack per day per cigarette retailer = ~$1.5 to $2 million of daily revenue
Converting 200,000 smokers (half of 1% market share)= ~$200 million of annual revenue
Budget brands are gaining share of market
Data Supports Our Target Market
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CIGARETTE MARKET DYNAMICSE-cigarette growth modest among current smokers 80% of nicotine sales in convenience stores is
still cigarettes Over 60% of e-cigarette users are not
current smokers
Cigarette Market Share Gain/(Loss) in BPS CDC Cigarette Incidence by Income
-50 -50-30
-60 -70 -60 -70-50 -40 -30 -30 -40 -50
0
-10-30
-20 -10-10
-10-30
-30 -50-70
-30 -10
50 60 6080 80 70 80 80 70 80
10070 60
-100
-80
-60
-40
-20
0
20
40
60
80
100
3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20
Premium Branded Discount Deep Discount
21.4%
15.7%
11.4%
7.1%
0.0%
5.0%
10.0%
15.0%
20.0%
Less than$35,000
$35,000 -$74,999
$75,000 -$99,999
$100,000or More
2017 2018 2019
E-Cigarette Users by Cigarette Smoker Type
CurrentSmokers36.9%
FormerSmokers39.5%
NeverSmokers23.6%
Manufacturing and Distribution Platform
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PRIMARY MANUFACTURING SECONDARY MANUFACTURING DISTRIBUTION
Leveraging world-class contract manufacturing and packaging of cigarettes from TAAT material at a per-unit price Ship product pallets directly to wholesalersHighly scalable
Leverage existing tobacco sales channels State-specific and region-specific distributors No need to hire excess sales team members,
accountants, etc.
Focus on brand-building and other proprietary activities in-house while outsourcing secondary manufacturing
Cost-effective strategy that supports growth and developing best practices
TAAT’s production facility in Las Vegas converts hemp biomass into TAAT flavoured smoking material Currently expanding to ~25,000 square feet
TAAT products represented by CROSSMARK, Inc. Large Texas-based sales agency holds relationships
with more than 100,000 convenience stores, regional and national chains, wholesalers and distributors Supports in-store acceptance, merchandizing and
re-ordering of TAAT products Extensive promotional, trade marketing and analytics
support
CROSSMARK Partnership
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Leveraging CROSSMARK’s capabilitiesto expand product reach
Products launched in Ohio in first phase of broader rollout Products are already in ~150 stores in Ohio, with
~60% of stores that have had the product for at least four weeks making follow-up orders to date
Utilizing knowledge from e-commerce to support rollout strategy Prioritizing states with strong early adoption based
on online sales
Marrying Sales and Production Through a Curated, Managed and Staged Rollout
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OHIO
Ohio and its five surrounding states
have a total population of greater
than 47 million
TAAT cigarettes on sale through website as of February 17, 2021 More than C$150,000 of sales in first few days Nearly 6,000 new users visited online store in first 48 hours, generating 36,830 page views
E-Commerce Strategy
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Ethical marketing Selling to legal-age smokers through proven channels
Prices significantly below tobacco cigarettesServing highly targeted, customized digital ads to legal age-smokers through proprietary exchange developed by partner agency Ability to deliver ads to pre-qualified consumers as they near potential points of sale Serve additional ads to customers that respond to ads No need to go through ad brokers like Google and Facebook, meaning
higher utilization on marketing spendLaunched 15-second video ads on gas pump displaysSelling products through both the e-commerce and “Bricks & Mortar” channels Superior margins and no competition from tobacco cigarettes in the
e-commerce channel
Innovative and Cost-Effective Marketing Strategy
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INHERENT AND UNIQUE ADVANTAGES
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Leveraging Our First Mover Advantage
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BUILDING ON SIGNIFICANT MOMENTUM
Completed development of
Beyond Tobacco™products following
~12-month development
process
2019
Secured cigarette industry executives
with significant experience
Summer 2020
Patent applicationfiled for hemp
refinement technique
Aug, 2020
Initial order received from tobacco
wholesaler in Ohio
Oct, 2020
In-house production of Beyond Tobacco™
scales to 600 lb/ 272 kg per day,
sufficient to produce one 1,440-carton
pallet
Nov, 2020
Launch of products in
Ohio
Dec. 2020April, 2020
Launch of TAAT Global Alternatives
Inc. following reverse merger
Engaged CROSSMARK to expand availability of TAAT products
Launch of E-Commerce sales on TAAT website
Feb. 2021Sept, 2020
Appointment of SettiCoscarella as CEO
Secured 29,000 square foot facility for
manufacturing, R&D, distribution
Applied for listingon Nasdaq Capital
Market
Received first USD $1 million order
April. 2021
Management Team
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Setti Coscarella (Chief Executive Officer)Joined TAAT after leading a successful dedicated Reduced-Risk Product unit at Phillip Morris International. Brings extensive experience across a wide variety of disciplines
Tim Corkum(Chief Revenue Officer)Over 20 years at Philip Morris International, specializing in sales commercialization, direct-to-store supply chain management, and international product launches
Joel Dumaresq(Chief Financial Officer)Over 30 years of experience in finance and investment banking, as well as significant management experience in the natural resources sector. Previously CEO of TAAT.
Joe Deighen(Founder, Research and Development)Oversees R&D and production for TAAT. Production and distribution experience in the United States and internationally
JOE
TIM
JOEL
SETTI
Michael SaxonMore than 20 years of senior management experience in the international tobacco industry. Consultant to blue-chip institutional investors and venture capital and private equity firms.
Kit DietzMore than three decades of experience in convenience wholesale. Lengthy board-level experience in the cigarette industry.
Dr. Cindy OrserExtensive experience as an executive scientist at biotechnology and analytical diagnostic companies servicing U.S. government federal agencies.
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Advisory Board
Creating Win-Win Economics
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STRONG INCENTIVE TO SUPPORT TAAT’S BRANDS ACROSS THE SUPPLY CHAIN
RETAILER CONSUMER
Complete cigarettesmoking experience
at low cost
Exciting new product, margins superior to traditional tobacco cigarettes
Attractive tobaccoindustry-equivalent
margins
DISTRIBUTORPRODUCER
Focused on building a highly profitable, high-margin business
Reporting measurable benchmarks Number of stores Average selling price Total volume Growth in volume Re-order rate
Tracking points of sale Brick and mortar E-commerce
Meeting Our Operating Benchmarks
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Since listing on the Canadian Securities Exchange in June 2020, TAAT has completed multiple financings at increasing valuationsVotes of confidence from strong, recognized investors Ms. Debbie Chang, co-founder of Horizons Ventures, subscribed to
October 2020 private placement
Expanding network of support among capital markets participants
Programmed Capital Markets Approach
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